Oil Supply Threatens World Economic Recovery
High oil prices caused by low global oil supply is threatening the recovery of the world economy as a person’s spending power is reduced and as inflation driven up, causing upward pressure on interest rates, according to the International Energy Agency (IAE).
The statement released by the IEA was an expression of the IEA Governing Board of their serious concern about the growing signs that the rise in oil prices, which started in September last year, is affecting the overall economic recovery of the world.
But though the complication, the IEA said that it is ready to work with producers as well as non-member consumers to work it out, considering all tools that are at the disposal of IEA member countries.
In a statement from a governing board meeting on Thursday, May 19, 2011, the board urged oil producers to find actions that will help avoid negative global economic consequences which could cause a further sharp market tightening and welcomed commitments to increase oil supply.
IEA’s warning came just a day after a report said that Iran’s president Mahmoud Ahmadinejad will be attending the meeting in Vienna. The news seems such a significant matter because Iran currently holds the presidency of OPEC, Iran is OPEC’s second-largest oil producer and it holds about 10 percent of the world’s oil reserves.
With this news, US light crude fell $1.66 to settle at $98.44 a barrel in the New York Mercantile Exchange while Brent crude slipped by 88 cents to $111.42 a barrel in the London based ICE futures.